U.S. multinational tax schemes

Matheson's leadership in the Irish tax strategies of U.S. multinationals, (or BEPS tools), has attracted attention from U.S. media over the years. In 2005, the Wall Street Journal ran a story on how Microsoft used an Irish subsidiary called "Round Ireland One" to avoid billions in U.S. taxes which was structured and registered in Matheson's offices (was then Matheson Ormsby Prentice, or MOP).^[26][27] In 2013 the Wall Street Journal ran another investigation showing that the scale of U.S. operations in Ireland, using Matheson registered tax structures, had dramatically increased from 2005.^[4] These strategies has seen Ireland labelled as one of the world's largest corporate tax havens,^[21][28] and blacklisted by Brazil.^[29][30][31] In 2019, it was reported that Abbott used Matheson to avoid billions in U.S. taxes.^[5]

Like other tax law firms in the IFSC, Matheson has openly marketed IP–based BEPS tools with effective tax rates of under 3%.^[32][33]

Mainstream U.S. media channels have singled out Matheson in Dublin, as a significant centre for U.S. multinational tax strategies.^[34]

In this regard, Matheson is akin to the situation of Irish PwC Managing Partner Feargal O'Rourke, whose development of the double Irish IP–based BEPS tool, has also made him the subject of investigative pieces by the U.S. financial media.^[35] Bloomberg recognise that O'Rourke, while being at the vanguard of legitimate but aggressive U.S. multinational tax planning, is considered a "hero" in Ireland.^[36]

Section 110 tax schemes and children's charities

In 2016, Matheson was criticised in the Irish media when it was revealed that U.S. distressed debt funds (known pejoratively as "vulture funds" in the Irish media),^[37] had used the services of Irish IFSC securitisation law firms to avoid billions in Irish taxes,^[38][39] on Irish distressed assets by using Irish Section 110 SPVs.^{[40][41][42][43][44]} These structures were created so IFSC law firms could administer global securitisation transactions.^[45][46][47] Matheson featured as one of the most frequently used advisors by the U.S. distressed debt funds (with A&L Goodbody).^[48][49][50]

The affair escalated into the "vulture fund tax avoidance" scandal,^[51] when it was found Matheson used three in-house children's charities (Eurydice, Medb and Badb),^[52][53][54] to make the Irish Section 110 SPV work in an Irish domestic setting (known as "orphaning").^[55][56] This was a purpose for which Finance Minister Michael Noonan acknowledged "the Section 110 legislation was not set up for".^[57] The affair became a major Irish scandal^[58][59] and was reported in the international media.^[60][61] The Irish State closed the loopholes,^[62][57] and prohibit Irish charities from being used in tax avoidance structures.^[63][64]

Panama Papers exposure

It was revealed in the Irish section of the Panama Papers leak of 2016, that a senior partner in Matheson, Stanley Watson, had established an offshore tax structure with Mossack Fonseca's help in Cyprus, to reduce his tax bill on moving to London to set up the Matheson London office.^[65][66] A woman in the Matheson Dublin office was helping handle the correspondence to establish the structure.^[65] The affair caused further embarrassment for Matheson when Stanley Watson's Isle of Man advisor was recorded as describing Matheson to Mossack Fonseca as "our biggest client".^[65]